A tiny Montreal-based company with patents covering international e-commerce transactions is demanding New Zealand internet retailers pay licensing fees to avoid being shut down.

DE Technologies (DET) has been granted patents in New Zealand, the US and Singapore covering cross-border e-commerce processes, which range from currency conversion and electronic invoicing to creating databases of purchase histories.

Now DET is looking to enforce its patents and generate revenue from them, the New Zealand Herald reported today.

Thousands of Internet retailers in the three countries could potentially be targeted with licensing demands in a move that appears to be initially aimed at small operators.

Among the first to be threatened with legal action was two-man operation www.productsfromnz.com, which advertises and accepts payment for New Zealand-made products over the Internet.

The firm received a letter from James & Wells, a law firm acting for DET, which demanded a "signing fee" of $US10,000 ($16,762) and a "royalty rate" of 1.5 per cent of website transaction value.

Website founder Simon Cope said the letter threatened his business with an injunction unless it paid up for a three-year licence agreement.

"We're in our first year, we haven't even made a profit yet," Mr Cope said.

He would seek legal advice before deciding whether to remove elements of the site covered by DET's patent, or simply ignore the action.

Either way, a protracted legal fight was out of the question, Mr Cope said.

He thought his company was targeted because of its high rankings on Internet search engines.

"We've no ability really to (fight it). This is beyond me from a funding point of view."

James & Wells' lawyer, Ian Finch, would not reveal which other Internet retailers had been sent letters similar to Mr Cope's.

But DET also has Internet providers in its sights, the Herald reported.

The letter to Mr Cope outlines a licensing model that would apply to ISPs which host infringing e-commerce operators and would involve paying an upfront fee of $US25,000 covering 25 merchants and a further $US1000 for each additional e-tailer it hosts.

This licence type would attract a royalty rate of 1.15 per cent of total transaction value and US5.5 cents per document produced.

"They're basically trying to lay claim to the idea of providing a service to a customer," Mr Shearer said.

He feared thousands of small e-commerce operators would be unable to afford to mount a challenge against DET's claims.

The Internet Society was looking at DET's patents, and executive director Peter Macauley doubted the licence demands would stand up to legal scrutiny.

"In my experience events like these are usually someone out to make a quick buck," Mr Macauley said.

Intellectual property lawyer Matt Adams said DET's patents may be successfully challenged and made invalid.

He said patents were often granted because examiners were unable to find research material that would invalidate them.

"If anyone can find any documents which describe the system or evidence of its commercial use in New Zealand prior to December 1997, that's good grounds for invalidating the patent," he said.

The men behind DET's far-reaching patents, Ed Pool and Douglas Mauer, claim to be the first inventors to "computerise the ability to do international business transactions".

The patent application originally drew Congressional objections in the US, but was granted last year.

Then, the Wall Street Journal reported that DET had been granted a controversial patent by the US Patent Office that "purports to cover any computerised process for automating international-commerce paperwork".

DET Montreal-based president Bruce Lagerman said the firm was just going after licensing revenue it was entitled to. It also had a "licensing programme" in place in the US.

"We're not going after the little guy, we're not interested in enforcement proceedings unless we have to," Mr Lagerman said.

In 2001, DET unsuccessfully sought help from Investment New Zealand to set up its business here.

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A company called PanIP has tried something simlar. They patented the use of text and images on the internet as a means of selling and the use of a form to collect user info. It's been on slashdot a couple of times here and here. There's also a couple of threads on the oscommerce forums about it - are we all going to get sued? and who owns ecommerce?

these guys target small companies hoping they'll pay up.

This post on slashdot is from a company who called their bluff and never heard from them again.

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A company based in Canada has obtained an e-commerce patent in Australia which could soon result in it telling companies involved in online commerce that they need to pay licensing fees in order to transact business.

D.E. Technologies has already started asking companies in New Zealand to pay licensing fees in the region of US$10,000, according to a report in the New Zealand media.

The patent, details of which are here, was sought in 1999. It was granted in February this year, IP Australia confirmed today.

Patent US6460020 is for "an international transaction system for operation over the internet/intranet provides a pre-transactional calculation of all charges involved in any international transaction" and the inventors are listed as Ed Pool and Doug Mauer, both of the US.

D.E. Technologies is likely to encounter stiff resistance in Australia.

Matthew Tutaki, the business development director of Syntropy Systems, and the person who raised the issue today, said the granting of the patent effectively gave D.E. Technologies "ownership over all international e-commerce transactions conducted by Australian business."

Tutaki said the granting of such a patent to a foreign-owned company could potentially cost Australian industry hundreds of millions of dollars a year.

"At no stage should a patent with this much effect on the Australian economy, international trade and whole industries have been granted and at no stage should IP Australia have allowed a foreign company the rights of ownership of e-commerce in this country. More to the point, it will now take civil action in the Federal Courts to have this matter overturned as the review and response period has passed," he said.

Tutaki has invited any interested parties to join him in attempting to get the patent overturned.

He said he would be approaching the office of Information Minister Richard Alston and Federal Attorney-General Darryl Williams to see if the matter could be resolved before resorting to legal action

An international transaction system for operation over the internet/intranet provides a pre-transactional calculation of all charges involved in any international transaction. Upon the option of the customer, the goods can be viewed on catalogue sheets translated to a language of the customer's choice, and the price provided in a currency selected by the customer. The customer also has the option of initiating the order with automatic credit authorization, generation of an electronic title or commercial invoice and arrangements and payment of shipping charges and any taxes and import/export duties

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Confirmed, it does affect us all, the campaign to also involve the United States

Matthew Tutaki, Business Development Director of Sydney Based firm, Syntropy, has today indicated that the fight against the granting of a Patent to provide ownership of International e-commerce transactions to United States based company, DE Technologies, will indeed move to the United States. This follows hundreds of calls and emails of support to Mr Tutaki over the course of the last 48 hours as the story has unfolded in Australia. It is now estimated that if the Patent is to be officially sealed in Australia, based on what is happening in New Zealand at the moment, the cost to the national economy could indeed amount to Billions and not Millions as first thought.

Mr Tutaki indicated that closer examination of the letter that had been received by scores of New Zealand businesses, indicated that not only would royalty fees of $10,000 USD per organisation be charged, but that DE Technologies had also stipulated a charge of up to 1.5% per of the total value of the transactions as well as 11c per document used such as lodgement forms, purchase orders etc.

?Further examination of the letter to New Zealand business has revealed that ISP?s and Hosting companies are also at threat ? in this country that would apply to organisations as large as AAPT, Telstra Bigpond and Optus and Credit Card Gateways ? there are also immense implications for organisations who are involved in foreign exchange calculations such as the large banks and trading houses. Again, I am sounding a warning to all Australian business to join with me to combat this threat and try to contain it before the Patent is officially sealed by IP Australia.? Tutaki Said.

?We can not allow a foreign company to dictate the terms of our trade or how we conduct business in a global environment, but more to the point is the fact that this Patent should never have been granted in the first place. This country is very fortunate that we have a last port of call in that at the eleventh hour, upon finding out that this Patent was about to be sealed, I had the ability to apply for an extension of time so we as a business community could file a comprehensive notice of opposition. We must do all in our power to ensure that this Patent is never sealed and that any other Patents that are similar in its threats should be located and dealt with in a similar way.? Mr Tutaki said

After an early morning telephone call to the Office of a United States Congressman in Washington D.C Mr Tutaki indicated that it was also a matter of time before DE Technologies sent similar letters, as the one that has been sent to New Zealand businesses, to business in the United States.

?This Patent is a global threat and a threat to international trade conducted over the Internet ? the warning to my colleagues in the United States is simple, be prepared for what is currently happening in Australia, I am certain you will eventually receive the same treatment.? Tutaki said.

Television New Zealand indicated last night that the eyes of New Zealand Government and Business are on Australia as we seek to have the Patent withdrawn. Mr Tutaki filed a motion of extension at 11am yesterday morning and is currently working on a motion of opposition. He also had strong praise and confidence in the Federal Government that this matter would be resolved.

Tutaki has also renewed calls to the United Nations to investigate a single arbitrary body, similar to the one that looks into domain name registrations, to take responsibility for Patents that have an impact on a global scale.

Mr Tutaki has urged any business or organisation involved in International e-commerce trade to contact him in order to form a wide body of support.